EMI Loses Again, Maybe An Unlimited Legal Budget Isn't Such A Good Thing

EMI who has spent millions battling against the personal cloud music locker had their most recent strategy backfire. Unhappy with the previous ruling (See: A 99% Victory) the UK based major label asked the Judge for a 'do over' in his ruling affirming that MP3tunes could store a person's music collection online without requiring more payments to the labels. They complained about two specific issues of his ruling but the Judge not only refused to reverse his findings, but added more reasoning making an appeal that much more difficult.

First he said that MP3tunes didn't delete repeat infringers as the law requires us to do for legal protection. This time the court delved deeper into the legal record and concluded once again that MP3tunes was a good net citizen. People don't use MP3tunes for infringement since every account is password protected. The Court sifted through thousands of emails from MP3tunes employees (including mine) and found again that "MP3tunes does not promote infringement."

More devastatingly, the court greatly expounded on its brief mention about how older songs are treated like newer songs which MP3tunes is not liable for. In his initial ruling there was simply a footnote reference that pre-1972 songs are also covered by his ruling. The labels stridently disagreed and submitted pages proclaiming how differences in state law and federal law meant the Judge got it wrong. This did not sway Judge Pauley to reverse his findings. Instead he dedicated 2 1/2 pages explaining his reasoning. The pre-1972 issue is of paramount importance to the labels for several reasons. One example is Universal Music Group has sued Grooveshark ONLY for these older works. This ruling cripples UMG's argument in that case.

From the outset, many have been puzzled by EMI's decision to target MP3tunes as well as me personally with this lawsuit but it becomes clearer when one understands the chaos of EMI's management and their relationship to an outside legal firm. An outside corporation performs all the litigation work for EMI. This firm doesn't care if they win or lose the case because they get paid to fight. The more they fight, the more they get paid. This explains why in this latest move they went back to the same Judge with the same evidence telling him he got it wrong and asking him to reverse his findings. Unsurprisingly this rarely works, but it's a chance for more billable hours and to increase their bills to more than $6 million. The fact that it actually makes an appeal more difficult for EMI is a plus because that means more time will have to be spent on those creating even greater riches for the attorneys.

Extensive turnover in EMI's management means nobody is there to oversee the litigation costs or strategy. Currently EMI is owned by the megabank Citigroup who is likely unaware of the runaway legal expenses or fruitless strategy since they are concerned only with finding a buyer for EMI to get their multi-billion dollar investment back. The litigation firm senses this leadership vacuum and operates unimpeded taking every opportunity to drag out what is now a 4 year legal process with countless motions. An unlimited legal budget benefits only the lawyers not EMI. Maybe it will take a new owner to rein in the attorneys, but any objective analysis shows they are hurting EMI more than helping.